New research on trading and investing trends has found that 17% of Australians have lost significant amounts due to a bad investment or a bad trading decision.
A study commissioned by online trading provider Global Prime also found that only 27% of Australians say they typically never made a bad financial decision about investing or trading.
The Global Prime report says the past two years of COVID-19 and lockdowns have sparked new interest in trade and investment.
“Many newbie traders are joining the market in the hope of making a quick profit,” the report says.
“It has also led to an increase in trading scams, especially in the volatile world of cryptocurrency, where crypto frauds and ‘rug-pull’ scenarios are rife.”
Jeremy Kinstlinger, Co-Founder and Director of Global Prime, along with his business partner Elan Bension, said: “It is truly worrying that so many Australians have been negatively impacted financially by making the wrong choices in business or business. investment.
“More needs to be done to increase the financial literacy of Australians at all levels, especially those who may be vulnerable to scams. “
Elan Bension said: “It is especially important for young people and all newbie traders who can be inspired to enter this world through what they see online or the ‘influencers’ on social media, to take the time to learn about potential falls. , so that they can avoid making these mistakes in the future.
According to Jeremy and Elan, here are the six most common mistakes new traders or investors should seek to avoid:
- Do not ask to see trading receipts:
“Ask your broker questions such as’ Are you profiting from customer losses? Or “Can you share the business income with me?” for example, will make it clear that you are going to hold your broker accountable. “Keep in mind that if a broker doesn’t offer trade receipts showing that they were not on the other side of your trade, you won’t know for sure if they are profiting from your losses.”
- Not fully understanding the risks involved:
“Trading involves a risk of capital loss, especially when trading leveraged products. If a trader starts out without a good understanding of risk management, they are more likely to lose. “
- Not enough emphasis on trading psychology:
“You can have the best strategy in the world, but without the right mindset a trader will lose.
“Unless a trader has learned to manage his impulses and emotions, he is very likely to run into problems.”
- Negotiate without a plan or strategy in place:
“Trading without a plan can and should be equated with play. Eventually, the ups and downs a trader goes through will lead to poor decision making and ultimately a loss of capital.
“Having a plan and strategy in place and transaction logging helps stick to the plan, which means not making decisions on the fly. Knowing when to enter and exit a transaction before the transaction enters and exits. not adjusting the middle of the deal will help keep you on track. “
- Not finding the right mentor:
“It’s information overload online when it comes to figuring out a strategy to trade with, and it can be difficult for a newbie to sift through the information and formulate a plan.
“Having a good mentor can really help nudge a trader in the right direction, and if he takes it seriously, he can also be held accountable to his business mentor just like a sports coach.”
- Not choosing the right broker:
“Most traders learn the hard way to avoid pressured tactics, deposit bonuses or inducements.
“If a broker is trying to convince a newbie, it’s usually not a good sign. because most profit from the losses of customers and will not have the best interests of the merchant at heart.
“Traders will want to find a well-regulated broker with a personal support team, good pricing and execution of their trades as well as public access to founders or senior management should anything go wrong.”
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